Two more Hindenburg Omens this week.
Picture a scenario in which a Manchurian Candidate hand picked by Vladimir Putin wins election and then spends the next two years fending off legal attacks over his rigged election. In the event, dozens of his election cronies are indicted and sent to jail. Then, the same week he himself is finally exonerated due to lack of proof of direct collusion, he picks up the phone and calls ANOTHER Russian stooge government and demands that they help him rig his NEXT election. You can't make this shit up.
I realize what I described has been adamantly rejected by Faux News and all of its senile acolytes, but this is the story that history will tell. This will be the legacy of the Banana Republican party. The total destruction of democracy, in order to keep Caligula in power.
But of course the 2016 criminality merely led to greater abuses of power. Because not only did Trump perfectly time his tax cut to buy the mid-term election, the Republicans purposely modified paycheck withholdings to give the illusion of a larger tax cut ahead of the mid-term election:
January 10, 2018:
"The IRS is facing its first big challenge implementing the new tax law: deciding how much in taxes to withhold from millions of Americans’ paychecks. The agency is under pressure to take as little as possible so people will see big increases in their take-home pay ahead of this year’s midterm elections. But that would come at a cost: smaller or even nonexistent refunds next year, though millions rely on them to plug holes in their family budgets."
We know what happened. While tax refunds in aggregate remained about the same thanks to the tax cut for the wealthiest households, MILLIONS of middle class families were bilked out of their annual tax refunds.
No consequences.
All of which fraud has led to the biggest election rigging gambit of all. A Fed pivot in 2019 to save Trumptopia from crashing, featuring three "mid-cycle" rate cuts, and a fully monetized deficit. The largest balance sheet expansion since 2009. And now the Fed has NO exit strategy for monetizing Trump's massive deficit. Because the bond market can no longer absorb this much Treasury issuance. A fact NO ONE wants to admit. Combined fiscal and monetary stimulus running at 10% of GDP. Yes, you read that right. On a scale unprecedented in U.S. history. Concerns for deficits and future generations no longer even a consideration, amid 5% borrowed "GDP". Unbelievable.
The Fed safety net was squandered to rig another election. Which will lead to the hardest economic landing in U.S. history.
"The United States, Japan and others tightened travel curbs to virus-hit China on Friday while businesses struggled with supply problems from an epidemic that has infected nearly 10,000 people and been declared a global emergency."
The Fed safety net was squandered to rig another election. Which will lead to the hardest economic landing in U.S. history.
And of course, all of that hyper-stimulus went straight into the veins of financial markets, causing the largest uninterrupted melt-up in 48 years. While the economy itself rolled over in the other direction. Setting up the largest gap between stocks and bonds in U.S. history.
On Tuesday I described the end-of-cycle Lehman type conditions that attend this longest expansion in U.S. history, with China as the locus of implosion. Yesterday I described the 1987 stimulus over-dose risk and unresolved liquidity collapse. Also yesterday, I explained that VixPlosion is right on schedule. So, it's only appropriate that this (non) impeachment week also features a Y2K blow-off top in progress.
While everything else is going RISK OFF due to the Coronavirus, a handful of the most over-owned and over-valued mega cap Tech stocks are going parabolic into the trillion dollar stratosphere. Giving the illusion of a strong market. The most recent being Amazon which reported earnings Thursday evening. A divergence that has expanded crash risk every day this week:
Which is why it's fitting that we learned this week that consumer confidence is the highest since twenty years ago, in Y2K.
By way of showing just how well this entire con job has worked.
All manipulated by *free* money:
Which gets us to smash crash 2015. As we recall, Hugh Hendry predicted tremendous opportunity in Chinese stocks due to their 25 year low GDP growth. Or to paraphrase his words, the Chinese government has unlimited ways of fueling imagined realities in Disney markets. Well it turns out that was not true. The Chinese markets soared and then crashed. At first U.S. gamblers believed they were "decoupled" from China risk. Therefore they continued speculating. Biotech in particular was on fire.
The last time we saw Amgen doing this was in August 2015.
Good times.
Fast forward and China is once again crashing, amid 30 year low GDP growth and Chinese markets re-open to global pandemic on Monday.
"The United States, Japan and others tightened travel curbs to virus-hit China on Friday while businesses struggled with supply problems from an epidemic that has infected nearly 10,000 people and been declared a global emergency."
Position accordingly.
